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Mixed messages from Europe's economy

Friday, November 22, 2013 - 01:51

Nov 22 - Europe's economy continues to confound economists. After a week which saw a slump in French business activity but German economic confidence at its highest level for 18 months, Joanna Partridge assesses the mixed signals coming from the euro zone.

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More signs that German firms are powering ahead. The Ifo business confidence survey rose more than expected in November - hitting the highest level in over a year-and-a-half It follows surprisingly good manufacturing and services data earlier in the week. The numbers also seem to show Europe's biggest economy is firmly on the road to recovery - and leaving some of its neighbours behind. Disappointing data from France has also highlighted how fragile and uneven the recovery is. And Europe's still seeing many protests - these French farmers complaining about rising taxes. Continued problems in some parts of the euro zone was acknowledged by European Central Bank boss Mario Draghi, speaking at a meeting of top bankers in Frankfurt. SOUNDBITE: Mario Draghi, President of the European Central Bank, saying (English): "It's important to understand interest rates are low because the economy is weak. If we raised rates, we would further depress the economy, people would lose their jobs." The ECB recent rate cut to a new record low is intended to give stimulus to some of Europe's strugglers. That may also give Germany and its export-led economy a boost. But there are other countries which are a cause for concern, says Michael Gallagher from IDEAglobal. SOUNDBITE: Michael Gallagher, Managing Director, IDEAglobal, saying (English): "Germany is obviously helping, but I think sort of critically, Italy and France not really getting to the point where you could call it a recovery yet. And with the Dutch economy also having some severe headwinds, two out of the big five euro zone economies are probably not enough to produce confidence in a sustainable recovery." Spain also appears to have turned the corner - its long recession is over. The challenge for Spain and its neighbours will be to bring unemployment and debt down further. And that at a time of little growth or inflation.

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Mixed messages from Europe's economy

Friday, November 22, 2013 - 01:51